Plan Your Coverage

Determine what benefits you need. Consider the following:

If you are living on a fixed income and are able to afford only the most basic coverage, favor Plan A, the core plan. Among other things, you’ll get an extra 30 days hospitalization per year beyond what Medicare pays. It also covers 100% of the Medicare Part B coinsurance for approved medical services, which is usually 20% of the approved amount.

You may also want to consider plans, K or L, if they are available in your area. These policies help limit out-of-pocket costs for doctor’s services and hospital care at a lower premium; however, you will have to pay more of Medicare’s coinsurance and deductibles before the policy pays its share of the costs.

Family History. You or your family’s medical history is such that you want to be prepared to pay for nursing care, consider Plan C. Your $166 per-day co-payment under Medicare would be covered up to 100 days for skilled nursing facility care.

Foreign Travel. If you travel overseas extensively, you can get coverage for emergency care in a foreign country with Plan C through G, M and N. In Massachusetts and Minnesota foreign travel coverage can be found in the Supplement 1 Plan and the Basic Medigap Coverage, respectively. In Wisconsin, a Foreign Travel rider can be added.

Find out which policies are available to you.

Not all insurers offer all plans in all areas.

Will you be denied coverage by some insurers due to your health? Find out which ones and eliminate them from your choices.

Does the insurer deny coverage for pre-existing conditions? If you are past the 6-month window following enrollment in Medicare Part B, companies most often deny you coverage for a specific period of time. However, some companies do not do this so their annual premium may be higher. You need to consider whether or not the higher premium is worth the coverage.

Are you a member of AARP? If so, you may be able to obtain a policy through its sponsored insurer. Other affinity organizations also offer coverage through a Medigap insurer. Be sure to check with any groups of which you are a member.

Do you want a Medicare Select plan? If you buy a Medicare Select policy, you are buying one of the 10 standardized Medigap plans A through N. With a Medicare Select plan, however, you must use the network providers to get full insurance benefits (except in an emergency). For this reason, Medicare Select policies generally cost less. If you don’t use a Medicare Select hospital for non-emergency services, you will have to pay what a traditional Medicare plan doesn’t pay. Medicare will pay its share of the approved charges no matter what hospital you choose.

Compare the premiums. Not only will you want to check out the premium you would be charged for different plans, but it is important to understand that there are three ways that insurance companies set the prices for policies.

Attained-Age Rating. With this type of policy the premium will rise as you age. For example: if you buy at 65, you pay what the company charges 65-year-old customers. Then at 66, you will pay whatever the company is charging a 66-year-old. The Medigap policy will go up in cost due to age, in addition to the increased cost of medical care.

Issue-Age Rating. With this policy, the insurance company will charge you based on the age you were when you first signed up; you will always pay the same premium that someone that age pays. Unlike attained-age policies, issue-age policies do not go up because you are another year older. This is not to say that your premium won’t go up. It will increase as the insurer raises rates for that particular age.

No-Age Rating or Community Rating. This is the least common way that policies are priced. No matter how old you are, the policy costs the same. With this structure, younger people pay more than what they would pay for other polices and older people may pay less. The premium is the same for all people who buy this plan regardless of age.

You may only be concerned with catastrophic illness. If so, you may not need to buy a Medigap policy at all, especially if you are relatively healthy, live a healthy lifestyle, and currently only incur routine medical expenses that would cost less than the premiums for a Medigap policy. You could purchase a catastrophic, or high-deductible health insurance policy that would kick in when your medical bills exceeded a predetermined level, such as $5,000. The Medigap K and L plans may also be a good choice. They should cost less than other Medigap plans but will provide a cap on out-of-pocket expenses.

What is the insurer’s safety rating? If you were to experience the double misfortune of becoming seriously ill and having your insurer fail, you may be responsible for much of your unpaid claims, and it would be difficult to find replacement coverage.

We recommend you choose a company with a B+ or higher Weiss Safety Rating if you can. You should also consider an insurer’s level of customer service and timeliness in reimbursing claims. Ask friends about their experiences and contact your state’s insurance department or counsel for aging to find out if they keep public complaint records. As an industry, Medigap insurers have a good reputation for paying claims.